Olivier,
Looks like you've got the hang of this! You're in a good position. Even if you're called out, you have $1,600 profit (minus commissions). Not a bad 6 week return of 18%. You could do far worst. Here's what I did:
06/19 BOUGHT 1000 ODP @ 18.375
06/25 BOUGHT 1000 ODP @ 18.9375
06/25 SOLD 20 ODP JULY 20 @ 2.03125
07/01 BOUGHT 20 ODP JULY 20 @ .03125
Net Cost Basis (incl comm.): $16.79
I beleive the stock is worth $20+. If earnings are on target for 2nd quarter, preimums will improve. Here are my current options:
1) I could sell the July $17.50 @ .1875 for another $375 and net $1,700 after being called out and giving $2,737 back for a 1-month gain of 9.5%. There's also the chance I won't be called.
2) Wait for the stock price to creep a little higher and and grab a higher July $17.50 premimum. Then sell the calls to further reduce my cost basis.
3) I could sell the October $12.50 at $4+. That's $12,000 of my call buyers money, (4k + 8k = 12k), that I can use over the next four months to buy and sell calls on another stock (on margin of course), to keep my protfolio happy. At 10% monthly gains I'd net $5,569 after being called out and giving $8k back for a 5-month monthly gain of 7% per month.
4) Really live dangerously and wait until the 3rd week of July for 2nd quarter earnings. If they're good, I win. If they're bad, look to buy more stock on a DIP, average down my cost and start writing calls at lower strike prices.
5) On strategies (3) & (4) above, if earnings are poor, and the stock falls again, I'll use part of the $12k to cover at .03 - .20 on the dollar! (DIPPITY DO) And I'll do it again, and again, and again, until the stock recovers and I make a healty profit. Meanwhile my cost basis on this next play is at $12.50
I think I'll take the weekend to consider my "options." Ring! Ring! Did you hear that cash register sing?!!!
;o) |
